John Patrick Merin

BSMA

1-7

P 2-1 (Cash and Net Assets Contributions)

The Statement of Financial Position of Acosta as of December 1, 2021 is as follows:

Acosta Company

Statement of Financial Position

December 1, 2021

ASSETS

Cash P 600,000

Notes Receivable 375,000

Accounts Receivable P2,250,000

Less; Allowance for Uncollectible Accounts 150,000 2,100,000

Merchandise Inventory 600,000

Furniture and Fixture 1,800,000

Less: Accumulated Depreciation 450,000 1,350,000

TOTAL ASSETS 5,025,000

LIABILITIES AND CAPITAL

Notes Payable 750,000

Accounts payable 1,575,000

Acosta, CapitaL 2,700,000

Total Liabilities and Capital 5,025,000

Aguas offers to invest cash to give him an equity credit equal to one-half of the equity of Acosta after
adjustments for the items below. Acosta accepted the offer.
1. The merchandise is to be valued at P650,000.
2. The Allowance for Uncollectible Accounts is P225,000.
3. Interest accrued on Notes Receivable should be reflected. The note is dated September 30, 2014 and
bears interest at 6%.
4. Interest accrued on Notes Payable for the period September 1 to December 1, 2021 should be
recognized. The interest rate on the note is 10%.
5. The furniture and equipment are one third depreciated.
6. Office supplies on hand, which have been charged to expenses, amounted to P15,000. These
supplies will be used by the new partnership.

Instructions:

1. Prepare the journal entries on the books of Acosta to give effect to the partnership formation.
2. Prepare the Statement of Financial Position for the new partnership
 1. Journal entries
Merchandise Inventory P 50,000

Acosta, Capital P 50,000

Acosta, Capital P75,000

Allowance for Uncollectible account P75,000

Solution: (225,000 - 150,000 = 75,000)

Interest Receivable P3,750

Acosta, Capital P3,750

Solution: (375,000 x 6% x 2/12 = 3,750)

Acosta, Capital P 18,750

Interest Payable P 18,750

Solution: (750,000 x 10% x 3/12 = 18,750)

Accumulated Depreciation P 450,000

Acosta, Capital P 150,000

Furniture and Equipment P 600,000

Solution: (1,800,000 x 1/3 = 600,000 - 450,000 = 150,000)

Office Supplies P 15,000

Acosta, Capital P 15,000

Cash P 2,525,000

Acosta, Capital P 2,525,000

Solution: (2,700,000 + 50,000 - 75,000 + 3,750 - 18,750 -

150,000 + 15,000 = 2,525,000)

Cash P 1,262,500

Aguas, Capital P 1,262,500

Solution: (2,700,000 + 50,000 - 75,000 + 3,750 - 18,750 -

150,000 + 15,000 = 2,525,000 / 2 = 1,262,500)
 Acosta and Aguas Partnership

Statement of Financial Position

December 1, 2021

ASSETS

Cash 1,862,500

Notes Receivable 375,000

Accounts Receivable P2,250,000

Less; Allowance for Uncollectible Accounts 225,000 2,025,000

Interest Receivable 3,750

Merchandise Inventory 650,000

Furniture and Fixture 1,800,000

Less: Accumulated Depreciation 600,000 1,200,000

Office Supplies P15,000

TOTAL ASSETS 6,131,250

LIABILITIES AND CAPITAL

Notes Payable 750,000

Accounts payable 1,575,000

Interest Payable 18,750

Acosta, CapitaL 2,525,000

Aguas, Capital 1,262,500

Total Liabilities and Capital 6,131,250

P 2-3 (Two Sole Proprietors Form a Partnership: New books are to be opened for the
Partnership)

Partners Abada and Albano agreed to combine their businesses into a partnership. The
Statement of Financial Position accounts of Abada and Albano are shown below:

ABADA ALBANO

Book Value Agreed Book Value Agreed Value

Value

Cash 50,000 50,000 70,000 70,000

Accounts Receivable 460,000 460,000 490,000 490,000

Allowance for Uncollectible 30,000 40,000 40,000 50,000

Accounts

Merchandise Inventory 900,000 950,000 720,000 700,000

Equipment 180,000 120,000 90,000 70,000

Accumulated Depreciation 36,000 9,000

Furniture and Fixtures 120,000 90,000

Accumulated Depreciation 24,000

Accounts Payable 540,000 540,000 360,000 360,000

Instructions:

Give the journal entries to record the partnership formation under each of the following
independent assumptions:

1. A new set of books are to be opened for the partnership.

2. The books of Abada are to be used by the partnership.
1.
Account Title Debit Credit

Cash 50,000

Accounts Receivable 460,000

Merchandise Inventory 950,000

Equipment 120,000

Furniture and Fixtures 90,000

Allowance for uncollectible account 40,000

Accounts Payable 540,000

Abada, Capital 1,090,000

Account Title Debit Credit

Cash P 70,000

Accounts Receivable 490,000

Merchandise Inventory 700,000

Equipment 70,000

Allowance for Uncollectible account P 50,000

Accounts Payable 360,000

Albano, Capital 920,000

2. books of Abada

Allowance for uncollectible accounts 10,000

Abada, Capital 10,000
Merchandise Inventory 50,000
Abada Capital 50,000
Abada, Capital 24,000
Accumulated depreciation-Equipment 36,000
Equipment 60,000
Abada, Capital 6,000
Accumulated depreciation-Furniture and fixture 24,000
Furniture and fixture 30,000

Cash P 70,000

Accounts Receivable 490,000

Merchandise Inventory 700,000

Equipment 70,000

Allowance for Uncollectible account P 50,000

Accounts Payable 360,000

Albano, Capital 920,000